You’ve got to love reading through some of the Q and A on Trulia questions! I always love to clear up the consumer’s questions that seem to be so plain and simple for us but, not so simple for those who are not in our business. Here’s the short version of a recent question that I thought needed a bit of clearing up:
What is the difference between a foreclosure and a short sale and which is the best one to buy?
In response to the initial question – The difference between a foreclosure and a short sale is that a foreclosure is owned by the bank and a short sale is still owned by the homeowner of record. That homeowner is dependent upon the bank(s) approval of the sale of their property for less than what they owe on their mortgage(s). The short sale process can take awhile but, there are different schools of thought as to which is the best to purchase–short sales or foreclosures.
Consider this–Many homeowners who have lost their home to foreclosure, leave their homes angry and tend to stop maintaining or caring for their home, sometimes removing appliances and light fixtures as they are asked to leave their home, and sometimes even maliciously destroying their former homes as they leave the home. Many short sellers WANT to protect themselves from the 7-10 years of bad credit that a foreclosure can bring, therefore they do everything that they can to keep their homes maintained so that they CAN get a buyer and get out from under their mortgage with as little damage to their credit as possible.
Short sales can and often DO take longer than a standard home purchase or even a foreclosure but, the home that you buy, compared to other options (standard resale or foreclosure), can be in better condition and at a great price too.
Buying a foreclosure is easier on you and your agent but, if you have patience, a short sale can be the better investment, oftentimes requiring FAR less rehabilitation for you, as the buyer.
Charlotte North Carolina Real Estate
Debe Maxwell, CRS, Realtor®/Broker
THE MAXWELL HOUSE GROUP REAL ESTATE
1920 E. 7th Street
Charlotte, NC 28204
Mobile: (704) 491-3310
Fax: (704) 353-7014
Short sales became great options when we had inventory issues here in Vegas. Not many people have the patience to sit through one!
Given the choice, short sales are always better for the seller for the reasons you mention. For the buyer, it depends on their patience (short sales do take longer) and willingness to fix/repair (many foreclosures are neglected)…either way, buyers usually stand to get a good deal at a very good price.